MJ Gleeson is in advanced talks to sell its concrete repairs business to its management team.
The firm is attempting to refocus itself on regeneration and the sale is part of that process. Gleeson identified concrete repairs as a non-core activity when it announced a strategic review in March.
The buyout of the concrete repairs business will be led by Tony Rimoldi, its managing director.
Among its contracts is a five-year framework agreement with the Highways Agency for repairs and maintenance to motorway structures from Birmingham to Carlisle in Cumbria.
The concrete repairs business, which employs 200 people, is a small part of the overall company, with a turnover of £22.7m in the year to 30 June 2005. In comparison, housing, the largest part of the business, generated a £160m turnover.
The news comes after the company issued a profit warning last week. In the warning, Dermot Gleeson, chairman of MJ Gleeson, said: "The implementation of radical change is inevitably disruptive and, in consequence, the greater part of the profit previously anticipated to be recognised in this current year will be deferred into the next financial year."
Gleeson added that the restructuring and the state of the housing market had had a negative impact on profit margins. He warned that these factors would have an impact on the wider group's results for the year ending 30 June, which would be "very substantially below market expectations".
The restructuring has already led to the building arm being sold to a management team led by Martin Smout. MCL, Gleeson's rail business, was sold to Morgan Sindall for £23.3m.
The rest of the Gleeson engineering portfolio is up for sale, but sources close to the company say it is more difficult to extricate it from MJ Gleeson because it would be difficult to separate the accounts.
The company plans to reduce the number of speculative houses built by Gleeson Homes in favour of housing for sale in urban regeneration areas. In the six months to 31 December the homes and regeneration business made a £1.2m operating loss compared with a £2.2m profit the previous year.
In an attempt to reduce the company's overhead cost base Gleeson is moving its head office to Fleet in Hampshire from Cheam in Surrey.
The company said it would not result in many job losses.
It is restructuring its board and has shortlisted potential new non-executive directors.
- The focus will be on housing regeneration, commercial property development and strategic land trading.
- It is looking to offload concrete repairs and engineering, and reduce its residential development outside regeneration.
- It has already sold its building business and rail business, Gleeson MCL.